Ok, this was installed with Quite some Ease... Basically it was built to be Dummy Proof (no Offence Jon) but htats what you asked for
Its quite simple to use, Below the Post area (where you type your message in) there is a link that says Add image to post simple Click on that, it will open a form and you upload your file via that.
the form will do everythign for you, you browse to the file, and click Upload it! after you enter a description.
The file will then Be uploaded to a third party server (postimages.org) and you will automatically see your image code displayed in the post you created...
Now, 1 downfall to this (you may think) is it will only allow you to post your Thumbnail of the image you uploaded, BUT we like this idea hre, cause it will keep the posts to a nice width around here. if you upload an 800x600 or larger image, it wont streach the page...
I will post a picture at the end of this post so you can see how it works..
if you have any questions feel free to ask. but it is quite straight forward.
P.S. the image code is entered where your cursor is left, so rememebr to hit enter before you click hat link or it will be put beside your text